Pete Faulkner’s post Job Seeker data shows little change for Cairns alerted me to the latest data on recipients of Newstart and Youth Allowance (for young job seekers) from the Commonwealth Department of Social Services. These data highlight the ongoing lack of economic opportunity in Far North Queensland (outside of Cairns and surrounding regions) and North West Queensland, which are home to many remote Indigenous communities (see map below). In the Far North ABS SA3 region, job seekers receiving Newstart or Youth Allowance account for over 12% of the working age population. The Wide Bay-Burnett region also has a relatively high incidence of Newstart and Youth Allowance recipients (at 6-7% of the working age population).

Stark differences in the numbers of Newstart and Youth Allowance recipients exist across Brisbane metro regions. The leafy western suburbs have a very low incidence (at 1-1.5% of the working age population) while the Springwood-Kingston area has around four times the incidence of Newstart and Youth Allowance recipients (over 6%).

The high concentration of disadvantage in particular regions and suburbs should be of serious concern to policy makers. It should prompt them to encourage job creation through lower taxes, better regulation, and a more supportive attitude to economic development. Policy makers also need to ensure Australia does not have a tax-welfare system that discourages employment via high effective marginal tax rates for welfare recipients.

Thanks for your article. I think it’s useful to understand how the economic situation varies across the regions. In your last paragraph, you suggest that the high concentration of disadvantage in particular regions should prompt better economic policy.

I would imagine that anything less than “full employment” (whatever that means in practice) should prompt these policy improvements, regardless of the geographical distribution of the underemployed. Let me assume that, If the disadvantaged people were spread more uniformly throughout the state, you would still agree that a policy response would be required.

My question is: what difference should the non-uniform geographical distribution of the disadvantage make to the policy response? Would you advocate region-specific policies, such as different tax zones, or localised stimulus using, say, infrastructure investment in disadvantaged areas?

And perhaps it’s interesting to ask whether the clustering of disadvantage is a bad outcome. Would it be preferable to have disadvantaged people spread evenly throughout the state? I expect too much “gradient” could lead to ghettos. But if you assume that there are some parts of the state (e.g. riverfront properties) that are more attractive/valuable, and hence expensive, I would expect that disadvantaged people would be likely to move away from these areas. Could it be that the result of policies encouraging mobility lead to an uneven geographical distribution of advantage?

I suspect that the main problem is not with geographical distribution of disadvantage, but the *population* distribution of disadvantage – i.e. inequality. I think that the policy responses you suggested are really a response to inequality.

Yes, thanks John. You’re right, I’d be in favour of policy action even if there weren’t clustering of disadvantaged people. But the geographic clustering enhances the level of disadvantage in my view. What concerns me is that people living in some of the disadvantaged outer suburbs have access to far fewer employment and also community participation opportunities than people in more prosperous suburbs. Partly that is the result of failed historical policies where previous governments built large public housing estates in the outer suburbs. It’s also arguably a result of a tax-welfare system that has trapped many people into long-term dependency. This is a challenging public policy problem and I think I’ll need to write a full post to respond to your observations. Thanks again.

My concern with so many policy responses to problems like this are that Governments throw public money at regional economic development strategies when the region has no competitive advantage in the first place. These investments tend to be pretty inefficient, rarely work in the long-term, and result in ongoing legacies for local communities (a loss-making small convention venue is a small regional centre anyone?, a dam that delivers water to customers that can’t afford it). Markets are pretty efficient at allocating capital, including where it goes, so why does Government think it can do any better .

Labour markets are far from my expertise, but I suspect we are really dealing with a labour mobility problem here (Indigenous communities may be an exception, where there are also significant labour capacity challenges). What about policies that genuinely incentivise / facilitate labour mobility, so it is easier and actually feasible for people to move to where the work is?

Thanks Jim. Yes, I broadly agree policies should facilitate labour mobility. Cutting stamp duty would be a good start. Great point about loss-making convention centres, which are probably not just confined to small regional centres. I should do a stock take of them on this blog. Every time I go to BCEC I’m amazed by the huge amount of under-utilised space and the large opportunity cost associated with it.